The Partnership’s contribution to GDP can be estimated at three levels: the direct contribution, supply chain spend contribution (indirect), and the employee spend contribution (induced).
PwC has estimated the supply chain and employee spend contributions to GDP using an economic model of Botswana’s economy ‘which is internationally recognised by institutions such as the United Nations Department for Economics and Social Affairs’ (see Appendix 1 for more details on the methodology used).35
When the direct, supply chain spend and employee spend contributions are combined, the total economic contribution of the Partnership was US$4.4 billion in 2014 as shown in Figure 10. This was equivalent to 27 per cent of Botswana’s GDP in 2014.
The Partnership directly generated US$4 billion of value to the economy (as shown in Figure 11). This was the equivalent of 25 per cent of Botswana’s GDP for the year. Of this, 86 per cent (or US$3.5 billion) was generated by Debswana. De Beers Holdings Botswana makes a loss; as an exploration company, its operating costs were greater than revenue. This loss, however, is offset by the amount it pays its employees, leading to a direct contribution to GDP, which rounds to zero.
The Partnership’s direct contribution to GDP of US$4 billion is nearly twice that of the entire wholesale and retail trade sector, which includes hotels and restaurants, and more than four times that of the manufacturing and construction sectors. This is illustrated in Figure 12.
The Partnership’s direct contribution is only part of its total contribution to GDP. In order to estimate the total contribution of the Partnership, the direct contribution needs to be combined with the contribution generated through its supply chain spend (indirect) and the spending of the employees of the Partnership and in its supply chain (induced).
The supply chain and employee spend effects are small compared with the direct contribution to GDP of the Partnership. The main reason for this is the high value added to a diamond after it has been mined. This means that the direct contribution to GDP is significantly greater than the value of the goods and services being supplied to produce diamonds and on which employees are spending their wages.
35 United Nations (1999) Handbook of Input-Output Table Compilation and Analysis, Series F No. 74, Accessed from: http://unstats.un.org/unsd/publication/SeriesF/SeriesF_74E.pdf#) (Accessed 20 October 2015).